7 Credit Cards On Which I Pay The Annual Fee But Don’t Spend Much

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There are many reasons to consider applying for a credit card. When I tell non-miles and points people about how many credit cards I have, some are surprised to learn that there are a bunch of credit cards on which I pay the annual fee without actually spending much money on the card.

In this post I figured I’d look at seven of the credit cards that I pay the annual fee on, but don’t actually put much spend on. In no particular order:

The card offers a $121 annual companion certificate (the cost to use it is $99, plus taxes and fees starting at $22), which I value quite a bit. As long as you fly Alaska at least once a year with a companion on a fare that would be at least ~$175, you’ll come out ahead on this. I’ve gotten great value using the certificate for flights to Mexico, Seattle, etc.

Tickets booked with the certificate are eligible for mileage accrual and first class upgrades

The card offers a 10% refund on redeemed miles, up to 10,000 miles per year. Since I redeem at least 100,000 American miles per year, this card gets me a refund of 10,000 miles per year. I value that at more than the $95 annual fee, which makes the card a keeper for me.

So when you factor in the refund, you’re basically getting 5,500 points per year, which I value at ~$80. Then if you redeem even a moderate number of points you’re likely to come out ahead on the card. On top of that, the card offers a first checked bag free, which comes in handy when my parents travel with me on JetBlue.

You can come out ahead with JetBlue Card even if you don’t fly with them that often

The primary reason I hold onto this card is because of the annual free night certificate that it offers, which is valid at any Category 1-4 Hyatt property. I get outsized value with this benefit, and typically redeem it at hotels that would cost $200+ per night. Furthermore, as a Globalist member I get elite benefits on these stays, including room upgrades, free breakfast or lounge access, etc.

This card has what I consider to be the single most valuable annual free night certificate offered by any card. The card has just a $49 annual fee, and offers an annual free night valid at any IHG property in the world. This can easily be redeemed for a stay at a hotel that would retail for over $400 per night, and should be a no brainer for a vast majority of people.

This card actually offers a compelling return on everyday, non-bonused spend. That’s because the card offers one Starpoint per dollar, which I value at ~2.2 cents each. However, nowadays I put a lot of my everyday, non-bonused spend on the Chase Freedom® Unlimited, which offers 1.5 Ultimate Rewards points per dollar spent, in conjunction with a card like the Chase Sapphire Preferred® Card.

First of all, the card offers a $250 annual airline credit, which can be applied towards any purchase made directly with an airline. The way I view it, the real out of pocket on this card is ~$200 per year. The huge benefit offered by this card is the fourth night free perk, which I use all the time. This saves me thousands of dollars per year, and for me is the most valuable benefit offered by any card.

Nowadays most of the spend I put on this card is limited to paying for my fourth night free hotel stay.

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About luckyBen Schlappig (aka Lucky) is a travel consultant, blogger, and avid points collector. He travels about 400,000 miles a year, primarily using miles and points to fund his first class experiences. He chronicles his adventures, along with industry news, here at One Mile At A Time.

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Comments

Do you think the 4th free night benefit of the Prestige is that valuable also after July 23rd this year? taking out the taxes makes it really a 20-22% discount on a four night stay, and that have to be from the price in the hotel’s website. Given that you in most instances you can get similar discount (if not higher) by using 3rd party sites and/or apps or by just negotiating straight with the hotel, I do not see that much value in the benefit after July 23rd, unless you see things differently, so I will be glad to hear your opinion about this…

My list is similar, except I have opted for the Barclays AAviator Red over the Citi AA — same 10% refund, but I have the opportunity to earn 3000 EQD with annual spend.

I also keep the Citi Hilton Reserve. I wouldn’t have Gold status (free breakfasts when I travel) without it.
Although I don’t travel THAT much, the free breakfasts go a long way towards covering the annual fee.

@ JoB — It all depends on the type of consumer you are. Personally I’ll still get a ton of value out of this, since I never book through third party sites, since I like to earn points. So yes, the discount decreases somewhat, but I suspect I’ll be using the benefit almost as much as before.

Both Southwest cards (Plus and Premier) are two cards that I keep, but put very little spend on. Primarily because anniversary points and referral link bonus points help cover the annual fees. The Plus anniversary points aren’t great value, but since it’s under 5/24 I’ll probably never be able to get approved for it again.

I have an old United card that I don’t even get a free bag on flights. I keep paying the fee because I’ve had it over 20 years so it helps my historical average. I do use it to pay the taxes on United award redemptions, but nothing else.

So I’m really pissed off with my JetBlue card because I got the one with the annual fee and spent the money but they claim they aren’t giving me my points until I pay off my balance and I don’t know how that makes sense when I’m constantly use it. Thoughts? That wasn’t clear when I signed up.

Marriott business and personal cards for the anniversary certificate(s) + elite night credits. Also, the American Airlines Aviator Red from Barclaycard, which offers 10,000 miles on each anniversary (and 10% of redeemed miles back).

@lucky im curious if there has ever been any instances where a citi concierge booked a 4th night free reservation to come back and say that the reservation doesn’t actually qualify for a 4th night free?

it hasn’t happened to me but i came kind of close. i was in the process of booking a 4th night free reservation at a Sheraton Villa in Orlando. I think they were pretty close to making the reservation until the concierge i was speaking with realized that it wouldn’t apply since it was a timeshare property. the reservation i would have made would have also been non-refundable so wondering what, if anything, citi would have done to remedy the situation.

What about the Chase Business Ink for telecom and office supply purchases (at 5x); the fee is $95/year which is ~$60 (after tax – assuming you can deduct and depends on marginal tax rate). At 1.5 c/point that means you need to accrue about 3500 points to make it worthwhile or about ~$1,000 in spending in this category at a marginal accrual of 3.5 point/$ (5 – 1.5 for the unlimited; would be a bit less if you compare to Sapphire or Preferred as basis).

You should compare the value of the points in terms of redemption:
1) SPG card gives you 2x points = 6 Marriott (range of value for possible redemption)
2) Chase SR gives you 3x points = 4.5 c/$ of buying power if redeem on travel
3) Amex Platinum gives you 5x (if book through them on non-refundable) = 5 c/$ (or up to 10 c if you book your selected airline)

I think each has value depending on how you are looking to spend the points.

I’m surprised to see the AA and Alaska cards on this list, since they are pretty easily churnable. The rest of the list makes sense. I got the Prestige at $350 AF, so will definitely keep that, but I’ll still try to get a retention offer.

I keep Barclay AAviator Red because the “chip and pin” is very useful in Europe. I’ll be cancelling my Citi AA when the AF comes due.

I’m fortunate to pay only $350 AF for Prestige since I applied in-branch. I’ll definitely keep it for “4th night free”, but now that I have CSR I’ll put very little spend on it. (I do spend a lot on “entertainment”, which earns 2x on Prestige, but I now put domestic entertainment on my Chase Freedom Unlimited card, since I find UR points to be much more valuable than TYP.)

I keep thinking of getting the Hyatt or the IHG card, but is a free night without status for someone used to upgrades, free breakfast, late checkout, etc. really that great? There might be some times that I could use it, but most of the time would rather have the benefits. As Lucky said, he gets Hyatt benefits. Because of the recent near elimination of the Hyatt program (except for those at the highest level), there is not much left in the way of benefits for those at the lower levels, even with a free night. Would be interested in the thoughts of others.

Nevsky – I like to overnight in San Francisco from time to time. The IHG card annual free night (and the Citi Hilton Reserve free weekend night with $10,000 spend) are great for weekends when I would otherwise have to pay $300-$400 or more for the room. (The category limits on the Hyatt and Marriott cards limit their usefulness in this situation.)

Ben,
Thanks for this credit card info.
I would actually like to add the IHG Rewards Card to my portfolio.
However, Chase has gotten so stingy with overall cedit that – after getting the Marriott Card – they actually reduced my credit line on the Freedom and the Freedom Unlimited cards by 5K each, in order to maintain the overall credit line.
I found that to be almost a paranoid move, given my impeccable credit history.
I requested more credit on the CSR to avoid my credit score taking a hit when I book several air tickets.
They don’t seem to want to grant that either.

Nevsky: IHG rewards include Platimum Elite, 10% point rebate on points (up to 100,000 points a year). I’m waiting to get this until after I get and put the required spend on a Marriott card.

The Alaska card is most valuable for Alaska, Seattle, and Portland residents who can best take advantage of their stopover and open jaws rules on award and Companion fares. As an example, I’m looking at booking two cheap 1st class tickets Sea to Minn this Summer then Companion Fare back to Seattle, Stopover until January, Continue to Hawaii and back, Stopover until March then finish Sea to Palm Springs. I need to wait until I’m back in the US to book, so that I can buy an upgraded seat, then while the booking is still cancellable, upgrade the Hawaiian segments with miles. I’ll need to get back from Palm Spring, but by then I’ll have another Companion Fare, and I’ll have a new route worked out for it by then.

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About Lucky

Ben Schlappig (aka Lucky) is a travel consultant, blogger, and avid points collector. He travels about 400,000 miles a year, primarily using miles and points to fund his first class experiences. He chronicles his adventures, along with industry news, here at One Mile At A Time.

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